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CUPERTINO, Calif. -- Apple is buying more flair, swagger and song-picking savvy with its $3 billion acquisition of Beats Electronics, a headphone and music streaming specialist founded by rapper Dr. Dre and Jimmy Iovine, one of the first recording executives to roll with the hip-hop culture.

Wednesday's announcement came nearly three weeks after deal negotiations were leaked to the media. It's by far the most expensive acquisition in Apple's 38-year history, a price that the company is paying to counter a threat posed to its iTunes store.

The price consists of $2.6 billion in cash and $400 million in Apple (AAPL) stock that will vest over an unspecified time period. The deal is expected to close before October.

With $1.1 billion in revenue last year, Beats is already making money and will boost Apple's earnings once the new fiscal year begins in October, Apple CEO Tim Cook said in an interview.

Iovine, 61, and Dre, 49, were the keys to the deal. They began working with Apple in the early days of its iTunes store and now will become key in Apple's music divisions, though Cook said their roles haven't been determined yet

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"We have known these guys forever," Cook said of Iovine and Dre. "We've dated, we've gone steady and now we are getting married. This relationship started a decade ago, so we know there is an incredible cultural fit. These two guys have a very rare set of skills. It's like finding a particular grain of sand on the beach. It's that rare."

Cook indicated Beats' music streaming service was the main selling point in the deal, though the headphone line also is expected to continue growing, too.

Although he regards most technology companies as "culturally inept," Iovine believes Apple will empower Beats to realize its goals of improving the sound of digital music and creating playlists tailored for each subscriber.

"To complete our dream, we needed a company like [Apple]," Iovine said in an interview. "We couldn't finish this on our own."

The growing popularity of music streaming services such as Pandora and Spotify has been reducing sales of songs and albums, a business that iTunes has dominated for the past decade. U.S. sales of downloaded songs slipped 1 percent last year to $2.8 billion while streaming music revenue surged 39 percent to $1.4 billion, according to the Recording Industry Association of America.

Although Apple broke into streaming with the launch of iTunes Radio last September, the service has not been as popular or as lucrative as the company expected, according to two people familiar with the matter. The people weren't authorized to speak publicly about the matter and spoke on condition of anonymity.

ITunes Radio has 40 million listeners and will continue as a free service with ads while Beats Music will try to tap into the more than 800 million iTunes accounts to sell more subscriptions to its customized service. Beats Music currently has more than 250,000 subscribers, Cook said. That's well below the more than 10 million paying customers that Spotify's streaming service boasts.

Apple suddenly has regained its cool.

Apple is counting on the Beats acquisition to boost its cachet with teenagers and younger adults as it tries to remain a leader in digital music -- an industry that looks much different than when Apple reshaped the scene with the 2001 debut of the iPod.

"Apple suddenly has regained its cool," said Sony Music CEO Doug Morris, who was one of the first recording executives to embrace iTunes at Iovine's urging more than a decade ago.

Beats was founded in 2008 by Dr. Dre, whose real name is Andre Young, and Iovine, a longtime recording industry executive who is stepping down as chairman of Universal Music Group's Interscope Geffen A&M Records to join Apple. It now dominates the luxury headphone market. Its equipment is also a big seller in Apple's stores.

Operating from its Culver City headquarters, Beats commands 62 percent of the $1 billion U.S. market for headphones priced above $100, according to NPD Group.

The purchase marks Apple CEO Tim Cook's biggest strategic break from the way the Cupertino, California, company was led under co-founder Steve Jobs, who died in October 2011. Jobs favored smaller acquisitions and didn't believe subscription music plans would be popular. Before Beats, Apple's biggest acquisition had been its $400 million purchase of NeXt Computer, a company that Jobs founded after being ousted from Apple in the 1980s.

Cook said he never considered what Jobs would have thought about the Beats' acquisition during the negotiations. Jobs "told me to do what was right," Cook said. "And I am 100 percent certain this is what is right. This is one of those things that we will look back upon and say it was meant to be."

Morris, who considers Iovine to be his best friend, believes Cook is making a smart move that will give Apple even more credibility in the music industry.

"It's a game changer because Jimmy is that kind of guy who can change a game," Morris said. "I am not saying he is Steve Jobs, but he is a guy with new ideas and he really knows how to build the bridge between music and technology."

But some analysts question whether Beats will be a good fit for Apple, which makes most of its money selling hardware such as iPhones and iPads.

Forrester Research analyst Frank Gillett says Apple would have been better off developing its own headphones in-house and expanding into music subscriptions through iTunes.

"It's hard to understand why Apple would have to spend $3 billion on a nascent streaming service and a line of bass-heavy headphones," Gillett says.

Culturally, Beats is the complete opposite of Apple.

Yukari Iwatani Kane, the author of "Haunted Empire," an inside look at Apple since co-founder Jobs' death, also sees a disconnect.

"Culturally, Beats is the complete opposite of Apple," Kane says. "It's known for being loud and bold and in your face. It doesn't fit with Apple's understated, discerning brand."

Having visited Apple on a regular basis since he first met Jobs more than a decade ago, Iovine said he has no qualms about joining Apple.

"This is not a big company to us," Iovine said. "We can roller skate in the halls here. Dre and I have been working together for 22 years. We are not about to go somewhere where we are going to fall."

Dre was more sedate Wednesday than he was in a celebratory video posted online declaring him as hip-hop's first billionaire after news of the Apple talks leaked earlier this month. "To be able to do something that could potentially change the world, I'm thrilled."

-Nakashima reported from Los Angeles.

Car dealerships, unlike many other retailers, expect you to haggle. It's built into their price tags. So if you pay the sticker price for any new or used vehicle, basically ever, you're getting hoodwinked. When you walk into a dealership, prepare to haggle over just about everything -- the trade-in value of your car, the price of the car and extras like warranties. You'll have more leverage if you have more cash, but even cash-strapped buyers can and should negotiate.

Real estate agents expect some negotiation. But when buying a home, negotiation doesn't have to be all about price. If the seller isn't willing to come down on the price, ask for extras. For instance, ask that the seller pay more closing costs (which basically amounts to a cheaper deal for you). Or ask that the seller take care of some maintenance issues you found when you had the home inspected.

Mortgage companies will quote you a rate when you ask, but that doesn't mean you need to stick to that rate. If your credit is good (find out if it is, first) or you have a big down payment, you have plenty of leverage to negotiate a lower rate. And if you can't straight-up negotiate for a lower rate, you may be able to save by paying for points. This basically means you put more cash down for a lower rate, and, in some cases, it can save you a lot of money.

If you're renting from a landlord for the first time, rent may not be as negotiable. But if you're getting ready to renew your lease, don't just accept the now-higher rental price you're quoted. Keep in mind that it's a pain for rental companies and landlords to get you moved out, prep the property and move someone new in. Unless you're living in the hottest area in town, they'll likely lose money looking for a new renter. This means they may be more willing than you'd think to negotiate pricing.

Insurance companies usually get special rates from doctors' offices and hospitals. But those rates don't automatically apply to uninsured individuals -- or those who haven't yet hit their deductibles. If a medical bill isn't going through your insurance company, negotiate it. Often times, the doctor's office or hospital will come down on the price, so that it's closer to (or if you're lucky, even less than) what your insurer might pay.

If you're in good standing on your credit card account, you have plenty of negotiating power. You can negotiate lower rates, annual fees and higher credit limits. Even if you aren't in good standing, credit card companies can help you come up with a payment plan if you can't afford the minimum payments. You just need to ask.

When hiring someone to maintain your lawn, re-roof your home or pop out a dormer window on your second story, always get at least three quotes. And once you have those quotes, negotiate for a better price or a better deal. As with buying a home, you don't just have to negotiate for a lower price. Some service providers and contractors won't bring down the price, but they will often add in extra services for the same price -- or at least for a discount.

If you've recently gotten away from your cable or Internet company's promotional pricing, you may be in for a shock. Most of us fail to read the fine print that says just how much the service will cost after the promotional period. Before you call the company, look at the promotional offers other services in town are offering. Then, tell them you're considering switching so you can get a better deal. You may not talk them all the way back down to the promo price, but you can get pretty close.

Any time you buy big-ticket items like furniture or appliances, you should negotiate the price. This is especially true if you're buying in quantity -- for example, if you're purchasing both a washer and a dryer or an entire living room set. If the salesperson won't negotiate with you, ask to talk to the manager.

As with credit card companies, if you're in good standing with your insurance company, you may be able to negotiate for better rates. At minimum, you should ask about bundling your insurance policies to see how much that could save you. And if you notice your insurance company is running a new promotional deal that you're not in on, ask about it. The company may sign you up just for asking.

Collections calls are never fun, but they can be productive if you look at them the right way. Once an account of yours has gone to collections, that means the company has paid pennies on the dollar for the account. In other words, your $5,000 debt may have cost them $200 to take over from the original company. So a collections company may accept $1,000 for a $5,000 debt -- or possibly even less.

Whether you're shopping at a thrift store or a garage sale, you should always negotiate the price of used stuff. You can usually buy two or three things at once to get a better deal, or just negotiate for a better price on a single, bigger-ticket item.